Consolata David Mallya vs Equity Bank (Tanzania) Limited (Civil Appeal No. 122 of 2025) [2026] TZCA 374 (27 March 2026)

IN THE COURT OF APPEAL OF TANZANIA AT MWANZA ( CORAM: SEHEL. J.A., ISSA. 3.A. And ISMAIL. 3J U CIVIL APPEAL NO. 122 OF 2025 CONSOLATA DAVID MALLYA ....................................................... APPELLANT VERSUS EQUITY BANK (TANZANIA) LIMITED ................................. .....RESPONDENT (Appeal from the judgment of the High Court of Tanzania at Mwanza) (Philip, 3.1 dated the 13th day of May, 2024 in Civil Appeal No. 147 of 2023 JUDGMENT OF THE COURT 2n d December, 2025 & 27th March, 2026 ISMAIL. 3.A.: The appellant commenced proceedings in the Resident Magistrate's Court of Dar es Salaam at Kisutu, asking for assorted reliefs, key among them being, a declaratory order to the effect that the Guarantee Facility Agreement whose value is TZS. 120,000,000.00 was terminated on the ground of frustration. The alleged frustration arose out of the Government's ban on liquor sachets, imposed in 2017, and the respondent's failure to renew the Guarantee Facility Agreement in time. The facts reveal that the appellant, a Dodoma based business woman, was the main distributor of a liquor brand known as Konyagi, 1 produced by Tanzania Distilleries Limited (TDL); and beers brewed by Tanzania Breweries Limited (TBL). Her area of distribution coverage was Dodoma Region. This followed execution of an agreement with TDL and TBL, granting her distributorship rights of products produced by the two beverages companies. As part of the implementation of the agreement, the appellant procured a bank guarantee amounting to TZS. 120,000,000.00 to cover the products purchased through the distributorship agreement. The guarantee was issued pursuant to the Guarantee Facility Agreement entered between the appellant and the respondent, the issuer. The guarantee was intended to secure repayment for goods that the appellant procured on credit. Besides the guarantee, the appellant pledged other forms of security, including shares and landed properties standing on Plot No. 28 Block "D" Kisasa South Area in Dodoma City. It was alleged further that, in early 2017, the appellant reminded the respondent of the imminent expiry of the guarantee. The respondent promised to have it renewed for a further period but nothing was done until March, 2017, when it finally expired. It was not until 3rd May, 2017, that the respondent allegedly informed the appellant that there was going to be no renewal of the guarantee as the Government had introduced a ban on sale of liquor sachets. The ban was introduced when the appellant 2 had procured a consignment of Konyagi and the banned substance the value of which was TZS. 200,000,000.00. These products incurred the wrath of the ban when they were destroyed, leaving the appellant counting losses. The contention by the appellant is that the ban on liquor sachets whose introduction was within the respondent's knowledge had the impact of frustrating the performance of the guarantee agreement. Its consequence was to discharge the appellant from the guarantee agreement, implying that the respondent ought to have not honoured the demand for payment of the guaranteed sum without consultation with the appellant. On the contrary, and in what the appellant considered to be an act of illegality and lack of prudence, the respondent made immediate payment of the bank guaranteed sum. The respondent went further to threaten to sell the appellant's mortgaged properties. At some point in the trial proceedings, the respondent raised a counter-claim against the appellant and three other parties that included TDL and TBL. The counter-claim was based on the bank guarantee issued by the respondent to cover the appellant. The trial court dismissed the appellant's suit. The counter-claim fell through as well. Utterly dismayed by the dismissal of her claims, the appellant preferred an appeal to the High Court which suffered from the 3 same fate. Aggrieved, she has preferred the instant appeal. The memorandum of appeal that instituted the instant appeal is predicated on five grounds of appeal. However, given what will unfold in the course of determination of this matter, we think that ground five is what is, in the circumstances of this case, relevant. Its substance is as reproduced hereunder: " That, the High Court Judge erred in law by dism issing the appellant's appeal instead o f rem itting the file fo r re tria l to the tria l court fo r non-joinder o f the necessary parties after it concluded that the appellant could not institute the su it against the respondent w ithout involving TDL and TBL who are necessary p artie s." When the matter was called for hearing, Mr. Fraterine Munale, learned counsel, appeared for the appellant whilst his counterpart, Mr. Tazan Mwaite Ieke, learned advocate, represented the respondent. As we were set for the hearing, we called upon the counsel to confine their submissions to ground five of the appeal, as we considered the ground to be of decisive importance. Mr. Munale who addressed us first was of the contention that the nature of the proceedings dictated that Tanzania Distilleries Limited (TDL) and Tanzania Breweries Limited (TBL), the beneficiaries of the Bank Guarantee, were necessary parties whose participation in the trial proceedings could not be dispensed with. Their absence, Mr. Munaie contended/ was a serious travesty which vitiated the proceedings. While imploring us to be guided by our decision in Mexons Investment Limited v. CRDB Bank Pic [2022] TZCA 297, the (earned counsel submitted that the right course of action, in the circumstances, is to allow the appeal, nullify the proceedings and remit the matter to the trial court for righting the wrong pointed out in this ground of appeal. Mr. Mwaiteleke's oral submission was brief and concessional. In what was clearly a departure from what he submitted in his written submissions, he was convinced, as did his counterpart, that commencement of the trial proceedings was, owing to the exclusion of TDL and TBL, flawed. He threw the blemishes at the appellant as she is the person who put the wheel of justice in motion. On the way forward, Mr. Mwaiteleke subscribed to the route proposed by his counterpart. He, however, urged us to spare the respondent from paying costs. The prayer for costs was not contested by Mr. Munaie. From the counsel's unanimous submissions, the narrow issue for our determination is whether this is a case of non-joinder of necessary parties. As alluded to earlier on, the suit from which this appeal arises was founded on the Guarantee Facility Agreement which was executed to effectuate execution of the distributorship agreement between the appellant and TDL and TBL. The Facility Agreement on which the suit was predicated, facilitated payment of the sum that the appellant contends was undeservingly paid out to the ultimate beneficiaries. These are TDL and TBL. This fact is gleaned from, among others, the plaint which instituted the trial proceedings. In paragraph 3 of the said plaint, the appellant made the following averment: "The P lain tiff's c/aims against the Defendant are fo r declaration that the Guarantee Facility Agreem ent am ounting to TZS. 120,000,000.00 between the Defendant and the P la in tiff has been term inated by reason o f frustration upon the Governm ent Ban on liquor sachets in 2017 and the Defendant's failure to renew it on tim e, and a com pensation o f damages on lo st shares so ld by Tanzania Brew eries Lim ited which pledged as security after the Defendant failed to renew Guarantee F acility on time, and interest and other dam ages thereto." The contention by the appellant is that, the supply of the subject matter of the distributorship agreement was scuttled by the ban that the 6 Government allegedly imposed on the sellers and importers, including TDL and TBL. This, along with the alleged failure by the respondent to renew the Guarantee Facility Agreement in time, constituted what the appellant alleged to be an act of frustration which ought to have absolved her from liability against TDL and TBL. What we note is that, TDL and TBL who were the ultimate beneficiaries of the enforcement of the guarantee from which the appellant allegedly suffered loss and in respect of which reparation is craved through these proceedings, might have known a thing or two about the ban that eventually led to the alleged loss. However, none of the two actors took part in the trial proceedings. The ban was imposed on the products that they were supplying to the appellant. The said ban had an effect on the subject matter of the distributorship agreement for which the Guarantee Facility Agreement was executed. In our view, by contending that the agreement was frustrated, the appellant meant that what was frustrated was the distributorship agreement and all other agreements which were designed to effectuate the distributorship agreement. We are not oblivious to the fact that in law, choice of who should be impleaded as a party to the proceedings is a matter which is within the remit of a party that commences the proceedings. Such choice, however, is not without any statutory prescription. The law prescribes, under Order 1 Rule 10 (2) of the Civil Procedure Code, Cap. 33 (CPC) that, where presence of a person before the court is necessary for the court to effectually and completely adjudicate upon and settle all the questions involved in the suit, then such person is a necessary party and his joinder in the proceedings is indispensable. This prescription has since been stressed in many of our decisions, and the position that we distil is that such joinder may either be at the instance of the plaintiff or through an order of the court where the plaintiff has not done so, right at the inception of the suit. This implies that the courts are enjoined to ensure that the question of misjoinder or non joinder of the parties is addressed at the earliest opportunity. Thus, in Farid Ahmed Mbaraka v. Domina Kagaruki, Civil Application No. 136 of 2006 (unreported) the applicability of Order 1 rule 10 (2) of the CPC was underscored as follows: "Under this rule, a person m aybe added as a party to a su it (i) when he ought to have been jo in e d as p la in tiff or defendant and is not jo in e d so; o r (ii) when w ithout h is presence-r the questions in the su it cannot be com pletely decided." 8 See also: NUTA Press Limited v. MAC Holdings & Another, Civil Appeal No. 80 of 2007; Tang Distributors Ltd v. Mohamed Salim Said & 2 Others, Civil Revision No. 6 of 2011 (both unreported); and Tanzania Commercial Bank PLC & Another v. Newton Pambeya Mwaupina Kyando [2025] TZCA 676. As we alluded to hereinabove, the imperative condition set out in the cited provision is only limited to necessary parties. This exclusivity is intended to prevent 'busy bodies' from getting involved in the proceedings in which they hold no interest. The description of who a necessary party is has been laid down through decisions within our jurisdiction and beyond. In Abdullatif Mohamed Hamis v. Mehboob Yusuf Osman & Another [2018] TZCA 25, this Court enlisted the assistance of the Supreme Court of India the latter of which defined a necessary party. This was in the case of Baranes Bank Ltd v. Bhagwandas, A.I.R. (1947) All. 18, wherein a necessary party was defined to mean as follows: "... a necessary party is one whose presence is indispensable to the constitution o f a su it and in whose absence no effective decree or order can be passed. Thus, the determ ination as to who is a necessary party to a su it wouid vary from a case to case depending on the facts and circum stances o f each particular case. Among the relevant factors fo r such determ ination inciude the particulars o f the non-joinder party, the nature or not, in the re fie fclaim ed as w ell as whether o r not, in the absence o f the party, an executable decree m ay be passed." See also: Amon v. Raphael Tuck & Sons [1956] 1 All E.R. 273; NMB Bank PLC v. Nerly Jeremiah Mwaikatale & Another [2025] TZCA 1195; The Attorney General & Another v. Dhirajilal Walji Ladwa & 4 Others, [2023] TZCA 17828; and Kenyatta Drive Properties Limited & Another v. Yasmine Haji, [2025] TZCA 705. We need to underscore that, the idea of having all parties that hold interest in a matter accommodated in one suit is, besides helping to resolve matters in a manner that avoids future recurrence, another way of ensuring that all parties that may be prejudiced by the decision are afforded the right to a fair hearing. Both counsel are in convergence that circumstances of this case dictate that TDL and TBL be parties who, together with the appellant birthed the distributorship agreement on which the Guarantee Facility Agreement was anchored. The duo is also the beneficiary of the guarantee that was cashed on amidst the uproar by the appellant who believes that this should not have happened as the fiasco surrounding the failure by 10 the appellant to fulfil her obligations was not of her own creation. It was a supervening event that TDL, TBL and even the respondent were aware of. It is what she considers to be a frustration that she has dung on as a defence. This view was also expressed by the lower courts when they dealt with the matter. Both were unanimous that proceedings which did not factor in TDL and TBL would lack the lasting closure as questions would still be hanging on, in ter afia, whether the ban was known to the appellant's counterparts in the distributorship agreement and whether such ban amounted to frustration which would not entitle TDL and TBL to the guaranteed sum under the Guarantee Facility Agreement. At page 397 of the record of appeal, the learned trial Magistrate remarked in his judgment as follows: "Exhibit P7 collectively shows that those seized goods, liquor sachets were ie ft a t the godown owned by the p la in tiff and a t her custody, so she should take TBL and TDL into piay as she [w ishes] but not the bank." These sentiments were expressed by the learned Judge of the 1st appellate Court who, at page 855 of the record of appeal, observed as hereunder: li "So in the absence o f a distributorship agreem ent between TBL, TDL, and the appellant, there wouid not be a guarantee agreem ent The appellant started securing the distributorship agreem ent firs t and then sought fo r the bank guarantee agreem ent from the respondent to com ply with the term s and conditions o f the distributorship agreem ent Therefore, under the circum stances, the appellant cannot institute a case against the bank (the respondent) w ithout involving TDL and TBL in whose favour the guarantee agreem ent was made and the same em anated from their distributorship agreem ent with the ap p e llan t" What comes out as a surprise is that, despite the remarks, none of the courts went a notch higher and order the appellant, the plaintiff then, to bring the necessary parties on and let them have their day in court. Instead, they glossed over it and let the proceedings proceed unabated. We hold the view that, the absence of these parties constituted a serious flaw that denied the trial court the opportunity to determine thematter conclusively and in a manner which would uphold the fundamentalright of fair hearing. This was not the case in this matter, and what came out of it is a mere charade which can hardly pass the test of inclusive proceedings which conform to the constitution principles of the right to 12 be heard. We underscored this position in Tanzania Commercial Bank PLC & Another(supra). We held as follows: "Thus, the om ission on the jo in d er besides incapacitating the tria i court to fa irly and conclusively determ ine the su it to finality, it resulted into unheard condemnation which is in violation o f the fundam ental rig h t to be heard which is em braced under article 13 (6) o f the Constitution o f the United Republic o f Tanzania." The foregoing position cemented the view held by the Court in its earlier decision in the case of National Housing Corporation v. Tanzania Shoe Company & Others [1995] T.L.R. 251 wherein it was held: "The tria l was commenced and continued in the absence o f the necessary party and in the absence o f any direction by the tria l Court to do so. Thus the court proceeded without authority and that constituted a m ajor defect which went to the root o f the trial. I t rendered the proceedings n u ll and void. In the event, the appeal succeeds. The proceedings before the High Court are declared n u ll and void and are accordingly set aside." We are settled in our finding that the proceedings in Civil Case No. 109 of 2019 which bred High Court Civil Appeal No. 147 of 2023 were marred by a serious irregularity on which we cannot cast a blind eye. So serious is the irregularity that it renders the proceedings in the lower courts liable to vitiation. In consequence, on this ground alone, we allow the appeal. We nullify the trial and subsequent proceedings of High Court, quash both proceedings and set aside both decisions and orders emanating therefrom. We remit the matter to the trial court for fresh hearing after complying with the requirements of the law. DATED at DODOMA this 2n d day of February, 2026. Judgment delivered this 27th day of March, 2026 in the presence of Mr. Samwel Abdi Mbuya, learned counsel hold brief of Mr. Fraterine Munale, learned counsel for the appellant, Mr. Tazan K. Mwaiteleke, learned counsel for the respondent via virtual Court, and Mr. Nelson Nova “ “ e copy of the original. B. M. A. SEHEL JUSTICE OF APPEAL A. A. ISSA JUSTICE OF APPEAL M. K. ISMAIL JUSTICE OF APPEAL